UNITED STATES v. AMERICAN SOCY. OF COMPOSERS

September 7, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Defendant. In the Matter of the Application of STEVE KARMEN, Petitioner, for an Order Vacating or Modifying a Arbitration Award.

Petitioner Steve Karmen, a writer of commercial jingles, returns to this court whistling a new and catchy tune. By Opinion and Order issued June 26, 1992, this Court denied petitioner's second request to vacate the decision of a panel of arbitrators disposing of a dispute between the American Society of Composers, Authors and Publishers ("ASCAP") and petitioner, a member of ASCAP. Karmen and ASCAP had previously agreed that petitioner's request should go forward in this Court, ostensibly due to this Court's continuing jurisdiction over a consent judgment, originally entered in 1941 and subsequently amended in 1950, between the United States and ASCAP (the "Consent Decree" or "Amended Final Judgment"). Petitioner Karmen now moves to vacate entirely this Court's June 1992 Opinion on the ground that this Court lacked subject matter jurisdiction to hear his claims.
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BACKGROUND

Petitioner Karmen, the writer of an extensive body of successful jingles, has been a member of ASCAP since 1972. Persons such as Karmen join ASCAP so that their creative works may be licensed and they may share in the profits produced therefrom. Section XI of the Consent Decree requires, in general terms, that ASCAP make distributions to its members on a basis which gives primary consideration to objective surveys designed to determine the number of performances of their compositions. The system of distribution and classification is explained in detail in Attachments to a 1960 Order of this Court (the "1960 Order") further amending the Consent Decree.

Attachment "C" to the 1960 Order contains the "Weighting Rules," deemed to be part of the Consent Order, which specify the limits within which ASCAP may make distinctions in weighting different kinds of performances. A separate "Weighting Formula," printed with the 1960 Order but not deemed to be part of the Consent Order, establishes the precise weight given to each type of performances. As with the broader Consent Decree, changes to the Weighting Rules must be made by way of amendment effected with the approval of this Court. Members of ASCAP are given notice of the proposed amendment and an opportunity to show this Court why the proposed changes are not consistent with the underlying objective of the Consent Decree. ASCAP may alter the Weighting Formula independently, within the confines of the Weighting Rules, merely upon 30 days written notice to the Government. Any objection the Government may have to the proposed change are to be heard in this Court.

Petitioner then applied to this Court to vacate the decision of the Panel on grounds that he had been denied due process of law and that the Panel's refusal to conduct a trial de novo constituted misconduct. In an Opinion and Order dated March 30, 1989, the Court held petitioner's due process claim to be untenable, but remanded the matter to the Panel for further consideration because there was no indication that the Panel knew it could hear improperly excluded evidence or reevaluate the Board's factfinding. In the ensuing proceeding before the Panel, ASCAP produced its former chief economist and three members of its Board of Directors as witnesses. In addition, the Panel received post-hearing briefs on the scope of the Panel's authority to grant the relief sought by petitioner. The Panel then concluded that the rule in question was void as arbitrary, but refused to legislate a new rule, remanding the matter to the Board for further consideration.

Petitioner again applied to this Court to vacate the Panel's decision, claiming the decision was not final because the Panel merely voided the three percent rule and failed to legislate a new rule or specifically direct ASCAP's Board to do so. In the alternative, petitioner solicited the Court to determine on its own the weight ASCAP should accord to jingle performances. This Court rejected petitioner's claims in an Opinion and Order dated June 26, 1992, finding that the Panel's decision was final in that it exhausted the Panel's mandate, and holding that petitioner lacked standing to invoke the power of the Court to set the proper weight for jingle performances.

Karmen now stands in the peculiar position of moving to vacate entirely the June 26, 1992 Order on grounds that this Court lacked subject matter jurisdiction to hear claims petitioner himself twice brought to this Court with ASCAP's agreement.

DISCUSSION

The sole issue presented by this motion to reconsider is whether this Court lacked subject matter jurisdiction to entertain petitioner's application to vacate the arbitration panel's award. Karmen's moving memorandum contends that there is no constitutional or statutory grant of jurisdiction in this case. Although the Federal Arbitration Act (FAA), 9 U.S.C. § 10, provides that federal courts having subject matter jurisdiction over a proceeding may entertain applications seeking to vacate arbitration awards, the FAA does not purport to confer upon federal courts subject matter jurisdiction to entertain all applications to enforce, modify or vacate an arbitrator's award. See Harry Hoffman Printing v. Graphic Com., Int'l. Union, Local 261, 912 F.2d 608, 611 (2d Cir. 1990) ("we have consistently held that Congress did not intend the Arbitration Act as a grant of jurisdiction. There must be an independent basis of jurisdiction before a district court may entertain petitions under the Act.") (citing Ballantine Books, Inc. v. Capital Distrib. Co., 302 F.2d 17, 19 (2d Cir. 1962); Metro Indus. Painting Corp. v. Terminal Constr. Co., 287 F.2d 382, 384 (2d Cir.), cert. denied, 368 U.S. 817, 7 L. Ed. 2d 24, 82 S. Ct. 31 (1961)); see also Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983) (Arbitration Act "does not create any independent federal-question jurisdiction"). Karmen argues that his petition to vacate the arbitration panel's award was not supported by an independent basis of federal subject matter jurisdiction: the application did not present a question arising under the Constitution, laws or treaties of the United States, nor could federal jurisdiction be predicated upon diversity of citizenship.
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Pet. Memo. at 11-14.

Karmen also argues that subject matter jurisdiction may not be predicated on this Court's continuing jurisdiction over the ongoing implementation of the Consent Decree. Section XVII of the Decree provides that:

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Jurisdiction of this cause is retained for the purpose of enabling any of the parties to this Amended Final Judgment to make application to the Court for such further orders and directions as may be necessary or appropriate in relation to the construction of or carrying out of this Judgment, for the modification thereof, for ...

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